Virginie Chesnais serves as the chief marketing officer at Happydemics, an analytics platform that focuses on advertising technology. For many years, gamers have approached in‑game advertising with skepticism, and their concerns are not unfounded. The reputation of ads within video games is mixed; players often encounter redirects to unrelated websites or apps, misleading content, or dismiss buttons that are difficult to locate, all of which contribute to a frustrating experience.
A recent study conducted by eMarketer highlighted that 52 percent of gamers would abandon a session if they encountered several intrusive ad elements. Losing half of an audience at the very moment you are trying to engage them is far from an effective strategy.
However, advertisements do not have to be synonymous with annoyance. The same survey revealed that one in five gamers would actually increase the frequency with which they play a title if the in‑game ads were of a high quality and seamlessly integrated. Xbox is currently experimenting with a new ad‑supported game‑streaming service, and this comes at a time when the overall cost of playing is on a steady upward trajectory.
In this context, well‑crafted advertisements could find a natural and welcome home within the gaming ecosystem. The argument for introducing a form of "ads‑for‑games" model is more compelling than many might assume, especially when we look at the success of linear media platforms. Services such as Netflix, Disney+, and other streaming giants have demonstrated that a hybrid approach—offering both ad‑free subscriptions and lower‑cost ad‑supported tiers—can generate significant revenue while expanding the audience base.
Should Xbox’s experiment prove successful, it would not only preserve its existing subscriber base but also unlock an entirely new revenue stream at a moment when the brand is seeking fresh sources of income. This development matters because console gaming is increasingly being positioned as a premium offering. Prices for games, consoles, accessories, and downloadable content have risen to the point where many casual players find it difficult to justify the expense, effectively creating a barrier to entry for the everyday gamer. Xbox itself has stated that, when executed correctly, advertising can help lower the cost of accessing games.
The mobile gaming sector already provides evidence that ad‑supported tiers can serve as a gateway for players who are unwilling or unable to make large upfront purchases. By offering a free or lower‑cost entry point, advertisers can reach a broader demographic while gamers gain a more affordable way to enjoy content.
Crucially, this model would be entirely optional. Players who prefer an uninterrupted experience could continue to pay a subscription fee to avoid ads, while those who are comfortable with occasional commercials could enjoy the service at a reduced price.
This two‑tier system aims to retain the loyalty of long‑time fans while simultaneously making games more approachable for newcomers. Although there is no specific survey data on this particular announcement yet, it is reasonable to predict that the majority of gamers would tolerate a 30‑second advertisement if it meant they could play a beloved title or try a new game for an hour without paying the full price. Xbox’s own analytics are likely to confirm this hypothesis.
Data from Happydemics covering 285 in‑game campaigns across the United Kingdom and North America indicates that in‑game advertisements consistently outperform traditional TV, social, and online ads in terms of recall and attribution. In other words, players are more likely to remember an ad they saw while gaming and correctly associate it with the brand that displayed it. Xbox’s “around‑the‑game” approach—showing ads before the gameplay begins rather than embedding them within the game world—adds another layer to this picture.
Our research shows that pre‑game formats deliver a clear advantage in ad recall and attribution compared with ads that appear directly inside the game environment. The significance of this finding lies in the distinction between mere exposure and genuine brand connection.
While a television commercial or a social‑media banner might catch a viewer’s eye, it does not always translate into a strong mental link with the advertised brand. Gaming, by contrast, appears to sit in a unique league when it comes to forming those connections, which explains why companies like Xbox and EA are increasingly exploring ad‑based gaming models. It is important to note, however, that Xbox’s ads are not embedded within the gameplay itself; they are shown beforehand.
In‑game ad formats tend to excel further down the conversion funnel, delivering higher lifts in brand image, consideration, interest, and overall likeability. A hybrid strategy that combines both pre‑game and in‑game ads could theoretically offer the best of both worlds for advertisers, though it also risks provoking greater pushback from players who value an uninterrupted experience. Xbox has assured users that the advertisements will be non‑intrusive.
By placing ads before the game starts, the company hopes to preserve the immersive nature of the gaming session. This consideration is crucial not only for player satisfaction but also for advertisers, who want their messages to be part of the experience rather than a disruptive interruption.
Relevance will be key. No gamer wants to see an ad for cat food when they do not own a cat, or a promotion for a game they have already completed. By delivering contextual, targeted ads that make sense for the individual player, Xbox can keep viewers engaged and provide brands with a highly effective platform for reaching new audiences. Nevertheless, Xbox is navigating uncharted territory.
The first unknown is how players will react to this new advertising format, and the second is whether the revenue generated will be sufficient to justify a long‑term commitment to the model. The decision to explore ad‑supported game streaming reflects a bold, risk‑taking mindset from Xbox CEO Asha Sharma, who has shown a willingness to experiment with innovative approaches. Only time will reveal whether this strategy will meet its objectives. Historically, many gaming ad campaigns have relied on a "watch an ad, earn an extra life" model, offering tangible in‑game rewards in exchange for ad exposure.
Xbox’s proposal is different: it asks players to watch an ad simply to access a game they already own. Our existing data set does not yet provide insight into how this will be received.
Nevertheless, broader research on ad‑format perception indicates that descriptors such as "non‑intrusive" and "immersive" are among the most positively received attributes. If Xbox—and potentially other platforms in the future—wish to make gaming ads a sustainable success, these two metrics will need to be monitored closely.
In my view, Xbox will neither be the first nor the last major player to trial this kind of approach. Advertising has been part of video games for many years, but rarely with the player’s experience as the primary focus. Should Xbox manage to strike the right balance, it could pave the way for similar initiatives across the industry, ultimately making video games more affordable and accessible for the everyday gamer.